Print media revenue to grow by 13-15%: CRISIL Ratings report

Higher spending on advertisement (ad spend) by corporates in key sectors and an uptick in government ad spend in  view of the upcoming state and general elections are expected to lift the revenue of the Indian print media sector 13- 15% to ~Rs 30,000 crore this fiscal, says a CRISIL Ratings report.

Naveen Vaidyanathan, Director, CRISIL Ratings says, “Steadfast domestic demand for fast-moving consumer  goods, retail, clothing and fashion jewellery, launches of new automobiles, rising preference for higher  education, online shopping and growing real estate sales — sectors that contribute about two-thirds of the  print media ad revenue — will keep the momentum in ad revenue growth going. Higher ad spends by the  government, which contributes a fifth of the sector’s ad pie, in the wake of the upcoming elections will also  push growth. Therefore, we expect ad revenue to grow 15-17%, almost reaching the pre-pandemic level this  fiscal.” 

The report also says that the prices of newsprint have also decreased. This paired with the demand for advertising will lead to profitability of the sector surging ~1,000 basis  points (bps) to ~14.5% this fiscal.

The report states that the revenue of the sector is split 70:30 between ads and subscription. The revenues of the sector fell by 40% during the pandemic , however, 2022 and 2023 saw a pent up demand and revenues bounced back by 25% and 15%, respectively.

A significant share of readers continue to prefer physical newspapers as reflected in the 8-10% growth in subscription  revenue in each of the past two fiscals. This fiscal, subscription revenue is expected to grow 5-7%, largely led by  moderate revisions in cover prices. Additionally, print media companies, especially English newspapers, have started monetising premium digital content,  which is seeing good traction. English newspapers have been feeling the heat of digital competition more than the  vernacular ones. 

The subscription growth has a bearing on the profitability of print media companies because of increased  requirement of newsprint, the key raw material for production of newspapers. India imports more than half of its total  newsprint requirement and Russia, a major source, has been at a war with Ukraine since late February 2022. Freight  rates soared amid logistics logjams as the conflict intensified which pushed up newsprint prices in the last fiscal

Rounak Agarwal, Team Leader at CRISIL Ratings says, “The steep surge in newsprint prices sheared ~850 bps  off the operating margins of print media companies to ~4.5% last fiscal even though revenue increased.  However, newsprint prices have come down in recent months — correcting as much as 15-20% from the peak  last fiscal — owing to modest global demand and easing of supply chain issues. This, along with revenue  growth, should shore up margins by ~1,000 bps to ~14.5% this fiscal on a low base of last fiscal. Over the  medium term, margins should remain healthy but below the steady-state margins of >20% seen in the past.